Matt Blank

NELSON: This is the oral and video history project of the Hauser Foundation, Oral History Video Program of The National Cable Television Center and Museum. We're talking with Matt Blank, chairman of Showtime Networks. Matt, why don't you just take us back to – give us a little bit of your background, where you came from.

BLANK: I had a couple of jobs prior to working at HBO in 1976. I'd gotten out of college and really wanted to work in the media business, couldn't get a job.

NELSON: What year was this?

BLANK: It was 1972. I took a few other jobs in the meantime. Finally, in 1976 I got the opportunity to go work at HBO. Not being a great visionary, I viewed that as an opportunity to spend a year there and then hopefully get a job offer from CBS or NBC or ABC.

NELSON: Real media.

BLANK: Yes, real media. Within about a year, I was getting resumes from people at ABC and NBC and CBS trying to get jobs at HBO. So I certainly didn't make a great choice on a tremendous amount of foresight, but rather just a little bit of luck.

NELSON: What did you do before that? You had a couple of jobs?

BLANK: I worked for American Express in advertising, product manager of the American Express card. I hated every job I had until I got to HBO. When I got to HBO, it was a very interesting time, a very exciting time. They had just gone up on the satellite, had about 500,000 subscribers. I went from an office environment and some fairly big important marketing companies to working at HBO and literally getting on a commuter plane a couple of times a week and going deep into the middle of Pennsylvania, Ohio, West Virginia to launch HBO with the first satellite receive dishes that these cable systems had at that time. It was probably the most interesting experience in my business career.

NELSON: So was this kind of an affiliate relations function?

BLANK: It was affiliate marketing function, I think, in 1976 – 1977. I probably launched 200- 300 systems with pay TV all around the country.

NELSON: Just sort of refresh us in what HBO looked like in those days.

BLANK: HBO, in those days, was certainly not like it is today. There were some movies, a little bit of sports, a touch of original programming, stand-up comedy, an occasional music special. This was a very primitive time for cable TV. First of all, most cable in those days was still in the rural classic systems where you went into a market and everybody had cable. That's the only way you got television in those markets. Up until then, cable was sold like a utility. HBO was really the first programming in the whole new media world that we live now. It was happening back in those days. It was interesting for me having been from New York and gone to school in Philadelphia and probably spent time in Boston and Washington and maybe taken a plane trip to Los Angeles or San Francisco to all of a sudden be flying to Harrisburg, Pennsylvania and getting in a rental car, driving a couple of hours to Lewistown, Pennsylvania or State College, Pennsylvania – towns that I never would have seen if not for that job experience. You literally go into these towns and you ... Somebody taught me very early on that there's only a couple of blocks, but you could always find the cable headend by just following the trunk which you saw up on the poles. Every cable office pretty much looked the same in those days – kind of a small front office with a clerk or two up front, a manager's office on the side, and in the back a service/engineering side where there was a good deal of equipment in a room where the truck came in and picked up equipment to go off and do installations. With someone with my background, that was quite an experience. Every Friday night I'd find myself in some small town doing a launch party and pulling a switch with a small town mayor or inaugurating the satellite receive dish which was frequently the first one in the area at a launch party. Then I'd desperately try to get back to Harrisburg or the Pittsburgh airport by 10:00 PM in time for the last flight to New York. I'd spend my weekend in New York rather than in one of these small towns.

NELSON: Did these small towns maybe give you a perspective of what the market was like out there?

BLANK: It really does. I think that there's always a risk in growing up in a media-rich environment where you think that everybody thinks the way you do, and everybody has access to everything you have, particularly then. I think the technology in recent years has, in fact, delivered a great deal more to everyone in the country. In fact, there may be fewer differences, particularly on the cultural side. But back then, this was still the great unknown, I think, from a television stand-point. I think people failed to realize how new television is to much of the country, not even the television we have today. But these people were just getting used to basic cable in those days. Programming was an extra distant signal brought in from an adjacent market in those days. I wouldn't trade that experience for anything. I don't think I would have as good an understanding of the world out there if I hadn't done that for a couple of years and probably met some amazing people in those systems. Some of them are still amazing; some of them have kind of disappeared as history has changed this business so much. That was a real awakening for me from a social and cultural stand-point. You take someone out to dinner in one of these small towns, take the system manager out to dinner, and it'll be $9.00. I'd come back to New York and put a $9.00 dinner with a system manager on my expense account at HBO, and my boss would come along and say, "How could you have spent $9.00 on someone? That's impossible that dinner could only have been $9.00."

NELSON: You must be cheating, right?

BLANK: It wasn't just a business experience. It was a cultural experience.

NELSON: Give me another example of culture shock of New York boy meets the Midwest.

BLANK: Actually I remember one of my very first launches that I did for HBO. It was somewhere in central Pennsylvania, I think. What we used to do was to go there six weeks before a launch, meet with the system manager, come up with a marketing plan, go to the newspaper, take these ads to the newspaper, help the system manager put in the local information on the ads to run. You had to do that because we used to have situations where if we just sent the ads out that we had prepared for all cable systems to use, they'd say, "'Your name and phone number here' and 'Your offer' here." Very frequently, the ads would run and say, "Your name" and "Your offer" and "Your phone number" here. So if you didn't kind of walk the newspaper ads over to the newspaper and put the cable system's name and phone number in there, they might not really be that effective advertising. You had to go to the local radio station and help get a radio commercial recorded with a DJ. This was very different from what I had been doing when I was product manager of the American Express Card. You'd pick up a phone and a platoon of guys in suits would arrive from the ad agency and do all these things for you.

I remember the very first launch; you then went back after doing that initial marketing about 4-6 weeks later for the launch event and the party. They'd invite all the local dignitaries in the town, all the city fathers. We were at, I think, an Elks Lodge – which is fairly typical – for this Friday night dinner which started at 6:00. You'd have a few speeches and they'd serve little rubber chicken. The system manager would get up and talk about HBO and pull the switch. Either the first or second one that I ever did, I was up there speaking. In those days, I didn't do much speaking in public. Like many people, I was a very nervous public speaker. So these things were somewhat of a trial. So I'm up there at the podium talking to all these city fathers and influential people in this small town. I got about 60 seconds into my remarks and the sirens go off. Almost everybody in the room got up and ran out of the room. They were all volunteer firemen. I was left in this room with no one of substance, not really knowing what to do. So I sat down and ate dinner and waited for them to all come back about an hour later doing whatever they had to do, pulled the switch, and we launched HBO.

NELSON: But the rest of the speech got canned.

BLANK: The rest of the speech got canned, which is actually good news for me. I then would schedule these things - hoping to coincide with a fire in these small towns – in the weeks to come.

NELSON: Or arranging it. But you must have gotten used to this and gotten pretty good at getting up there. I'm sure the remarks would be consistent.

BLANK: That was one of the great things about working in this business in those days. You really got to do a lot of things. It was growing so fast at that time that you literally arrived at work on a Monday and on Wednesday you were on a plane headed somewhere to kind of teach yourself how to do this. I think I did launches in about 38 states over a couple of years. This was also great for me because I hadn't really seen the middle of the United States. I remember being in Mansfield, Ohio that year or a year later. I remember it because the country in about 1977 was going through a natural gas shortage. In many parts of the country natural gas is the major, most dominant fuel. The day we launched in Mansfield, Ohio, they had shut down all the factories in town for a week because of the natural gas shortage. They had shut down the schools. So here were people not getting checks and you were trying to sell them HBO that night. That Friday night of the launch party, Mansfield, Ohio was on the CBS or NBC news as the coldest place in the nation because of some horrible storm that had come through and had had their factories and schools shut down because of the natural gas crisis. We were trying to launch HBO there. So I sort of remember moments like that in various places.

NELSON: Were you at HBO when you actually first went up on the satellite?

BLANK: I arrived there about 3 months after the satellite had gone up.

NELSON: Is that one of the things that was driving the business at the time?

BLANK: That's when things really started happening because it became clear that for the following year, for about $100,000 you could put in a dish in a foundation behind a cable system's headend and begin generating new revenue sources. About a year or so later, the FCC approved the smaller dishes so that cost came down to about $30,000 at the time. This is sort of amazing. I have a house out in the country here where I now walk out in the back yard and see this little 18" dish sitting on the side of the house.

NELSON: Are you supposed to talk about that one?

BLANK: Well, it's for research purposes. But that, in fact, is where the technology has gone. You go to a big cable system today or the headquarters of an MSO and you see the antenna farms behind the buildings. It's amazing how fast the technology has come to that level.

NELSON: Right. But before we get to some of this technology, talk about your early days at HBO and who were some of the other people there that are still kind of around the business.

BLANK: I remember a couple of months after I got there, Michael Fuchs arrived as I think one of their first directors of original programming. The late Tony Cox came a couple of months after I got there. I ended up working for Tony for nearly 20 years off and on. John Billock, who is now president of HBO domestic networks, arrived a year or so later. There were a lot of people. HBO was really a great training ground in those days. Really, Turner followed shortly thereafter. But in terms of programmers, it was really HBO and Turner for a period of time – a couple of years. Then in the 1980s you had MTV, ESPN, and a bunch of those companies starting up. But we were pretty much out there alone. You weren't fighting against any other programmers for distribution, in those days. Showtime came along in '76 so they became HBO's primary competition at that point in time.

Interestingly, when I first started at HBO, our competitive environment was not HBO versus another network. It was really technology driven. It was premium networks versus stand-alone. There was a company called TPS that was in the business of what they called bicycling tapes. They had a number of pay TV affiliates, hundred of them out there, who were offering pay TV. They literally had an origination studio at the cable system. Every day, tapes would be Airborne or whatever technology for delivering that was state-of-the-art then. A tape would come in on Friday morning and you'd play that movie on Friday night. Then they would send it to the next system that was going to play it on Saturday night. It was highly inefficient. But that was the state-of-the-art from a technology stand-point prior to HBO networking first by the microwave network and then on the satellite.

So when we went out to try and sell HBO to a cable system, we were not selling against Showtime in those days. We were not selling against other networks to come along. We were selling them on the economics of putting in a satellite dish and offering a network service, a universally-networked service, rather than paying a booker like TPS to book. TPS would go to the studios and book movies for cable systems. The cable system would pay on a subscriber basis for the times that they played that movie. The idea that that was a distribution system, that they actually took a physical 3/4" cassette and sent it from one cable system to the other to make a schedule to play is pretty amazing today when you think you can kind of burst 400 – 500 channels of time down from a satellite through a cable system and out through a digital fiber cable system into your home.

NELSON: When you went out with this new technology and went into these small towns with the operators, what was their response to that? Were the people really immediately able to see that, "Oh, yes, this is the future"?

BLANK: Some of them were, but I'd say, in general, highly resistant because of the business they had been in. This was basically a utility type business. They were providing a technical service. You couldn't get TV in most of these towns before without cable. So someone - whether it was an Alan Gerry or whomever in upstate New York or the Walsons in Wilkes-Barre, and elsewhere – they all did the same thing. They had the same idea that they were going to go up on a mountain, put a TV antenna, and string up some cable and a few amplifiers down the hill where people couldn't get the service because they were too low around the mountains or too far away, and bring them cable service into their home. Again, if you wanted a television, you had to knock on that cable system's door and say, "I would like to get television service through cable TV." If they could wire you up they would. They'd charge you and you could then get probably the three network affiliates from a nearby town.

So that's been your business. You're a cable manager, a system manager. That's what you've been doing for the past several years. Someone comes along and says you're going to sell programming. Well, first of all, programming, that's a bit intangible. You've got to actually go sell the benefits of this programming. You've got to knock on doors. You've got to send people mail. You've got to do a pre-view.

NELSON: As opposed to truck chasing?

BLANK: It now required a new technology. It required a satellite dish. It meant going and putting boxes out there, securing the signal. For much of the country it meant dealing with content issues with the community. In the Bible belt, those were real issues. I can always remember a launch I did. We used to do these previews to launch the service. You'd get three free days over the weekend. You'd do a sell-a-thon. I used to go on air with the system manager, explain the service. I've seen some of those tapes. They're horrible, just horrible! But I can remember being somewhere in the Deep South - Mississippi or Louisiana - and we did one of these preview weekends. Our general advice was to try and schedule the preview weekends without R-rated programming which might be offensive to some in the community. We would frequently provide a program to be substituted on a preview weekend by video tape locally, if in fact the programming wasn't appropriate for that weekend when the system wanted to launch. I can remember we were playing The Exorcist at some point. I don't remember where it was, but it was somewhere deep in the Bible belt. I had advised against it. The system manager had insisted that it wouldn't be a problem down here that everyone had seen that movie, and it would be played at 11:00 PM on a Saturday night.

Well, we had a huge, huge uproar. Coming from where I came from and having seen the movie many times, I had assumed that the problem was that there are some fairly explicit scenes in The Exorcist and that those scenes were not going down too well in this community. The system manager explained to me that that wasn't the case, that this was a very, very religious, Bible belt town, and in fact the problem with it was that it was a movie about the devil. A lot of people in that town didn't like the idea of that.

Again, coming from New York City, raised in one of the boroughs of New York, somewhat different social and cultural experience, that wouldn't have been my sensitivity at all. I never would have gone to that town in Louisiana or Mississippi with a sensitivity towards a piece of programming about the devil. So it was a life experience as a someone who's now been involved in marketing and now very involved in programming to the masses on a grand scale, I'm always very sensitive to the fact that we live in a very, very diverse culture. It can be very difficult to sit in an office overlooking Times Square here and really think that you always know how the consumer is going to be affected by what you do serving the number and diversity of viewers that we serve.

NELSON: I'm happy we talked about movies. How about from the standpoint of boxing particularly? That was really a signature event. It was actually the first HBO satellite program.

BLANK: And it continues to be very much for Showtime. Boxing has always been one of those sports... First of all, it's very high maintenance. Sometimes you just want to smack yourself in the head and say, "Oh, how can we go through another fight here that has Mike Tyson biting somebody's ear." And it's not just Showtime. The same thing happened at HBO. You have a big match... If you've got the World Series and a player gets injured, the World Series doesn't get canceled. If you have a huge heavy weight fight with literally tens of millions of dollars behind it, and venues, and it's going to happen Saturday night at 11:00 PM. and Thursday afternoon at a light workout, somebody kind of twists their shoulder, your world falls apart and you wonder how you can go through this again.

So it's always been a very high-maintenance business and a difficult business and a cast of characters are unlike anything you'll see anywhere. We can talk about that if you'd like. But at the end of the day, consumers, particularly premium consumers, love boxing and always come to boxing in hoards. So it's been one of the mainstays over the years. I'm always amazed where I'll be standing outside my apartment or talking to somebody and they'll say, "We saw that fight" or "We heard about this on Showtime." I want to say, "Did you see Strange Justice last Sunday night?" We did 40 movies last year. We have ten series on the air. But boxing breaks though – and it's never dull. I will say that.

As difficult as the business is in... take the movie business. People will say that the movie business is the most difficult, with the most difficult cast of characters and sometimes one of those difficult people to deal with. When I deal with the boxing business, I always feel like that baseball player who's in the on-deck circle who is swinging three bats so that when he finally gets up there, drops the two bats, that one bat feels like a toothpick. It's so light and easy to swing. I sort of feel like the boxing business is swinging three bats so that when you work in the movie business it feels like a piece of cake.

But it's been one of the mainstays of premium TV for 25 years and still is. It's amazing how many people are attracted to the boxing.

NELSON: And that really helped drive...

BLANK: I think that boxing has been one of the strong consumer service since day one.

NELSON: Speaking of the characters of boxing, how about some recollections, particularly from your early exposure to it when you first encountered some of these guys and said, "What am I doing? I should have gone back to American Express."

BLANK: I will say that if I go way back then, I personally didn't have a lot of contact on the boxing side. But more recently, we joke about that I always wish that from the time I became president of Showtime (which was before I was chairman and CEO), going back 6-7 years, I wish I had kept a diary or a book of all my boxing experiences.

I remember one night in particular being a very, very late night. I was in a restaurant in the upper East Side here, an Italian restaurant, early in our dealings with Tyson in the past couple of years. I was there with Don King and Tyson and a bunch of their drivers, assistants, etc., heavily wired with beepers and telephones. If there had been a disaster there that night, you wouldn't have had any problem with communications because there were so many beepers and telephones. There were about 6 – 8 of us there, a couple of Showtime folks and the phone rang about 11:00 PM and the beepers started going off. Tyson and his guys had been staying across the street from this restaurant at Don King's townhouse where Don felt it was a good place to keep them, and Don could stay in a hotel.

While they came out to dinner with us, the idea was that Don's housekeeper would come in and clean the townhouse while they were out to dinner for 4 – 5 hours. One of Tyson's guys called from over there. There was a major disaster and everything just came to a halt. Don's housekeeper had refused to go up to the master bedroom to clean the big, full floor master bedroom that Mike was staying in because Mike had brought his tigers with him from the trip. He literally had a couple of small tigers, baby tigers, that, I believe he still has out in Las Vegas. He would travel with them in cages. So she went up to the room and there were these two small tigers there. So this about an hour of negotiation, but I think they finally paid her about $500 extra and sent one of the guys over to actually stay in the room with her while she was cleaning with these tigers. My attitude is, I have an Ivy League education, I've been working hard for 20 years, I'm president of a network now - what's wrong with this picture that I'm involved in this negotiation or the tigers?

That's just sort of a typical day in the life of the boxing business.

NELSON: And maybe that's a metaphor for boxing – surrounded by tigers.

BLANK: It is, but there's a certain absurd side to it all. We just have to say, "Okay. I'm not getting involved in the tiger thing."

NELSON: So when did the transition happen from HBO to Showtime?

BLANK: I actually came over to Showtime almost 12 years ago now. It'll be 12 years in January. I came over in early 1988 as executive vice president. I had been at HBO for a dozen years and had a few close colleagues who came to Viacom and offered me a bigger job as executive vice president with the opportunity to step up to president which happened a couple of years later. I also saw it as an opportunity to be chairman and CEO of this place in a reasonably short period of time and just to broaden my horizons, get much more involved in the programming side of the business.

NELSON: And that dropped you out of the rubber chicken circuit?

BLANK: No, I think none of us in this business are ever out of the rubber chicken. I think I've been on the circuit the past two nights actually. But it's better rubber chicken and it's here or it's in LA or it's in Washington.

NELSON: So when you made that transition, how, where had you risen in the ranks at HBO?

BLANK: I was senior vice president of marketing at HBO at the time, and I came over here as executive vice president, running marketing and a few other areas of the company.

NELSON: Talk about marketing. You know, that really has gone through a huge transition. You have some consumer product background.

BLANK: It has.

NELSON: And particularly in those days, how marketing was evolving as you saw it.

BLANK: Very, very different. First of all, the cable industry, for many, many years, didn't have much competition. It certainly does now in terms of the DBS business and other emerging businesses. As a result, I would say, it was not a consumer-intense business. It came up as almost a utility type business. When we went in and launched HBO, we really did it. We'd go to the systems. We'd tell them how to do it. It was not a business that attracted big, strong marketing backgrounds for several years. That's changed. I think now, as we approach the millennium, it's 1999, there's competition out there. There's more and more services that require aggressive marketing as you move from premium TV to pay-per-view to high speed access to all the digital services that are offered. These are marketing intense consumer businesses. I think you're going to have a very, very different level of professionalism and approach to the consumer out there.

And you have a competitor in the DBS business that has an advantage that the cable operator never had. Day one they were national marketers. Day one they could run an ad in USA Today and reach every potential consumer through television, print, radio, whatever they want to do. Cable has always had a different situation. They were, if anything, little pieces of the world out there, so they didn't have the opportunity to be big national marketers, and I think over the years that affected the way they marketed.

Now, as you see a lot of clustering, a lot of trades of systems, the likelihood of cable systems controlling major regions and markets and at the same time a lot more marketing intense products coming along. Cable operator had no competition for multi-channel video service for many, many years. They do now. They have many competitors in the form of DBS or a lot of the other developing technologies. They're entering the high speed access business from day one with a lot of competitors. I think that says that you can't enter the high speed access business over the next couple of years and not be prepared to market very, very aggressively, very promotionally, to spend a lot of money on it like your competitors are already doing.

So I think that that business is changing rather dramatically and will continue to do so. In terms of pay TV market, we used to do a couple of things. We used to knock on doors. Direct sales was the way cable was sold and programming was sold – and still is sold in some environments.

NELSON: And you mentioned the ad inserts.

BLANK: You provide a lot of local support to operators who weren't familiar with doing this. Then using television and video – God knows how many commercials that I've been involved in over a 20 to 25 year period. I must have done 100 commercials over the years, so much so that a couple of years ago here, we began, as our programming really stepped up in the marketplace, we embarked to very aggressively promote the product and really develop a state-of-the-art, very experimental, on the edge, image for Showtime. We brought in some new people in the creative side to do this.

I remember having a conversation with our executive vice president and creative director who I had hired outside this company about three years ago. Len and I were in a room like this, looking at all the commercials done over the years. I had been involved in so many of these. I said to him, "Len, I really want to see what you can do. I'm not going to be that hands-on in this. I really want you to run with it. You know how I feel. You know my thoughts on it. I just have one word – one paragraph or one statement here – 'No sofas'".

Every commercial I ever did had a family sitting on a sofa, sitting like this in front of the television, whether it was HBO or Showtime. Over the years, I saw the sofas spin. I saw the sofa turn into a movie theater. I saw the sofa turning into a flying carpet and take people where they'd never been before. I'd seen the sofa move from room to room where there was boxing, there was movies, there was specials. I saw the sofa pull up on top of a limousine with cleat lights outside the house. So I said, "We can try anything we want here, but not another sofa commercial." So we never had a sofa since that time in our advertising.

NELSON: How about any other marketing innovations you feel you were involved with?

BLANK: The whole idea of previews was very unique. But that was one of the mainstays. We still do them. Showtime does them. HBO does them. Basically going on the air for a weekend or a week or a night with a free preview of the service that all basic cable subscribers – you opened up the channel to all basic cable subscribers and you just came on. The system-wide preview or the local preview was really the precursor of the infomercial. The infomercials of today could have been premium TV previews 10 years ago, 15 years ago, 20 years ago, where somebody showed you a movie. Then for 20 minutes between the movie they talked about how great HBO was or how great Showtime was, told you to call the number, told you that you were going to get three free months or a free installation if you did that. That was something that was very, very much cable for years and years and years. Now it's gotten more sophisticated. You see Showtime spends $50 million a year in national advertising. You could see a Showtime spot or an HBO spot on the Super Bowl.

NELSON: Is that a plan or is that an evolution?

BLANK: No it's just an evolution given the size of our business and the importance of our brands. I think at some point in the past decade or so, the emphasis really turned to our brands as independent entities, not on our brands just as sold by the cable operator, and more importantly our programming to really put the money behind our original programming, which is really our raison d'être today, is to provide unique programming. As this world changes and the technology changes, the challenges get greater, one truth remains – if it's ours and ours alone and it's important and it's different and it's good and it's special and it may be a little bit out there on the edge, that will brand us, and that alone will be a reason for people to be with us, whether they are getting us streamed down the web, whether they are watching us through a normal cable connection.

The programming transcends technology. Nobody buys technology. Nobody wakes up and says, "Gee, I'd like to watch some good cable tonight or some good dish tonight or some good internet tonight." They want to watch something on cable or something through their satellite dish or go somewhere on the Internet. I think that's the important thing as we read today about all the technology and see the rapid technology changes at the end of the day. The programs and the brands are king. The technology is the facilitator. Yes, we have to make sure that whatever we do grows with the technology and we're in a position to take care of the technology. But that's why I think the past 10 years have been so important in terms of development of all the original programming.

NELSON: Was there a case of particular piece of original programming over the course of your career where you started to really feel like this was going a lot beyond just movies and boxing, that we're really starting to develop a brand, a programming machine?

BLANK: I think it's a number of things. We really embarked, about four years ago, in a very, very aggressive movie effort at Showtime. There's a dozen things you could talk ... In the past month alone, Strange Justice, the Clarence Thomas movie which has made an incredible impact out there. There's been a couple dozen of those things over the past 3-4 years for Showtime. I sometimes am amazed just at the level of talent and quality that we can turn out. It makes you very proud.

I remember when we did Twelve Angry Men, the remake of Twelve Angry Men about 2 –3 years ago; we were talking about doing it. Everybody was saying, "Why would you do this?" Jerry Offsay, who's our head of programming, and I talked about it and said, "Because it's Billy Friedkin directing it, it's Jack Lemmon and George C. Scott and Eddie Olmos and nine others of the twelve angry men that are just as impressive, and we think it will be great." And sure enough, it got nominated for an Emmy, got nominated for a Golden Globe. I remember sitting at home... sometimes when you go to a screening or you watch something in your office, you really don't get the same viewing effect as a television executive as when you sit in your home and you realize this is what people are seeing.

I remember watching that at home and sitting there and saying, "Wow. This is just exceptional. This is just exceptional." I don't care where you were with this programming, anybody sitting here watching this is going to be moved. It doesn't matter that it was done 30 years ago and there was a good reason to do it again. There's no doubt in my mind, at that point in time, that was the best thing on television. I think I've had moments like that where I've said, "Okay, we have accomplished this. This is really special. This is really different, and this is important, and we'll get credit for it being important from critics, from our employees, from our cable operator partners, and ultimately from consumers. And that will be the reason we're there on that dial, whether that dial has 600 choices, whether that dial is connected to something that looks like a computer, whether there's a big strand of coax coming in or a piece of fiber, that's the reason people come to us today." You can't lose sight of that.

And I think that's why we feel very, very good about the future. And I think it's why cable operators should feel good about the future. When you think about the amount of programming being done for cable today that is special, that is different, that is important, and wouldn't have happened without it. I think that's the thing you can point to today. When you look at this world out here, it wouldn't have happened without cable. So many times when we do a movie, I will sit at a premier or at a cocktail party afterwards and someone will come up to me and say, "Our movie never would have been made without you."

We had an experience this past year – our first film that we took to ... feature ... to theatrical before Showtime that we made – Gods and Monsters. It got four Oscar nominations. I'm not sure Gods and Monsters would have gotten made without us. So what is the cumulative impact of that over the past 20 years? It's unbelievable from an artistic sense. And I think that at the end of the day, the world may not care that a dish was 10 meters, then it was 3 meters, or that this cable operator had this many subscribers then and has this many subscribers now or bought this company. But they will care that cable, once again, provided the economic vessel by which the world of entertainment and the world of serving audiences and the world of giving people opportunity they wouldn't have gotten before changed. And that's the tremendous social contribution, I think, as we enter the millennium.

NELSON: Was there a time when, looking at this as programming evolved, where you kind of said, "Holy cow, this Hollywood star is in a cable production. I can't believe it."?

BLANK: I do remember – I used to think about it every year at the Ace Awards. I remember being at some of the early Ace Awards which were literally inviting a bunch of people over for a pizza and sat them down in an auditorium and kind of got this thing going. It's not exactly Sinatra or the Beatles when they started. But it is pretty amazing to me when I see the people we can attract, or more importantly, the people that come to us because they view us as being a place that is willing to take the risk and do something that others might not do. So you're not going to see, fortunately or unfortunately, Showtime paying somebody $20 million to make a movie. But you will see that same person coming to us, in some cases, because they care about a project and they know their project may not fit into the box that has been created by other media. They will come to Showtime because they know that Showtime is a place that will make that.

So sometimes I am amazed at the calls you get. And it's not always the biggest stars. It's just people ... I remember just a couple of weeks ago after the Emmys; my phone rang at home one evening. It was Jack Lemmon. I recognized his voice immediately. Jack Lemmon is not like Will Smith today, but Jack Lemmon was calling. He had done Inherit the Wind with us. It was after the Emmys. He had missed me at the Emmys, and he was calling to thank me and apologize, couldn't come to his party or something. We went in and had this conversation. He said, "You know, I have just had such a great time working at Showtime because of the things we've been allowed to do." He was in Twelve Angry Men and then Inherit the Wind with us. I said okay, there's a part of the market here that is being served with an absolute exceptional, exceptional group of programming because Jack Lemmon and his partners on these movies found a place where they could remake these two movies and weren't scared they were remakes and they'd be criticized versus the first movies when they were done originally. And that's important to us – a place where talent feels that they can bring things.

Dustin Hoffman brought us a project this year which we made – The Devil's Arithmetic, a holocaust movie for kids, a terrific, terrific project. The fact that Dustin Hoffman would bring that to us is as important as what we've been able to do because it says that the creative community sees us and sees cable as a place that is going to serve, again, unserved audiences, unserved needs with important programming, programming that may be a little bit out there in some cases and too risky for others.

NELSON: I want to ask you, speaking of names, a name you mentioned a lot earlier in this discussion - that was Tony Cox, somebody you worked with off and on over 20 years and is no longer with us. Give me some recollections about some of your early interactions with Tony.

BLANK: Tony arrived at HBO probably about the six months after I did in 1976. Tony had just an unbridled enthusiasm for the business and he had a great, great deal of passion for the cable operator and for cable as a business. Tony was a guy in those early days at HBO, where the word "no" didn't exist. There always had to be a different way of trying something and being successful with it. I think he was one of the main forces in building such a strong affiliate customer base for HBO in the late 70s after they went up on the satellite. He was a real professional, one of the early professional managers there that really brought some leadership and motivation to the company in terms of going out and taking advantage of the rapid growth of the market.

I came to Showtime with Tony, probably my closest adult friend. It was a tremendous loss when he passed away suddenly. He's one of the guys who really built the business, and a lot of us feel we wouldn't be here without him. We certainly think about him all the time here at Showtime.

NELSON: And certainly someone who influenced you personally in your career.

BLANK: Very much so. I think Tony always motivated me, always gave me opportunity. Whenever I was getting itchy or bored or thinking about something else, he'd always ... I now realize how effectively manipulative he was. He'd pull something out of the hat that he knew I'd be interested in and would keep me busy for awhile until there was the next opportunity or something. I think he's one of a handful of people who was really there in the early days of the programming side turning from a novelty where we're out there or we're up on the satellite. He said, "Okay, this is business. It has to be run professionally like other businesses are."

NELSON: What led to the formation of Showtime? HBO seemingly had a lock on that marketplace.

BLANK: Showtime was started by Viacom, again around the time the satellite went up. They were, I believe, a stand-alone business first and then went up on the satellite themselves. I just think they felt there was room for more,, room for more not just in terms of people who might want Showtime, but the big change was, I think, in late 1978 where they convinced a cable operator in Thibodaux, Louisiana (I was on the other side fighting against it at HBO), that there was something called multi-pay, that there was no reason you couldn't sell somebody Showtime and HBO. This was fairly radical at that time because HBO and Showtime weren't that differentiated. All the movies were non-exclusive, not as much original programming. Today of course you could sell them different because the movies are exclusive and totally differentiated and we each have all this differentiated original programming. So it doesn't seem like a big deal now. But this was 1978 – "You're going to what??" People were very shocked. But there probably wouldn't be a Showtime if that hadn't happened.

NELSON: Was there ever any doubt that, in fact, there was room for another player in the market? Was there a moment when you said, "Gee, maybe this is crazy. I should have stayed at HBO"?

BLANK: By the time I got here in '88, I firmly believe that Showtime was an underutilized asset that could grow and do some great things or I wouldn't have come here. That was a big change for the business, and it was an appropriate change for operators, for sure, and probably for everybody except HBO unfortunately. We fought like hell, I guess, in those days. But it was a natural evolution of the business.

NELSON: Certainly HBO hasn't really been hurt by this.

BLANK: No, I don't think it's hurt them.

NELSON: So when you got here in '88, what were some of the innovations that occurred at that point?

BLANK: Showtime had budget challenges then. One was, and probably the most significant, was it had gone through a lot of ownership changes and management changes. One thing we've had in the past dozen years now is stability of ownership and a good deal of stability of leadership. It was really just over that twelve year period just Tony and I, whereas in the previous years, they'd had a couple of CEOs, several changes in ownership and control, merger with the movie channel. It didn't really create the best environment for a company to operate and to attract good people and to be successful. I think over the past decade, and particularly the past half a dozen years, what we've done is focus the company on a culture of product and programming and the brands we sell from a culture of 'this is Showtime. We distribute through cable operators and we do X, Y, and Z.' I think we realized, as the business changed, that we really had to stand for something, that you're probably better off standing for something and failing than not standing for anything.

When you walk in this company today, it feels like an entertainment company. Half a dozen years ago it really didn't. I think if you go to one of our regional offices and talk to someone in sales and ask them about Showtime, they'll start singing the praises. You'll want to go running from the room after about 20 minutes after they've listed all the movies we've had, the movies that are in development, and the boxing that's coming up, and the series. We've all become advocates for our product and our brands. I think that's the heart of a company. Coca Cola couldn't be successful if 9 out of 10 people didn't take a swig of Coke and say, "Gee, I like Coke." I think we feel the same way about Showtime.

Ultimately we had to change this company into a company driven by its programming and by its brand. Those two things are very, very closely tied. Everything we've done in the past couple of years is with the focus of how do we generate more dollars to spend on better product, better advertising, better brands, better image for our service.

NELSON: Of course all this while at Showtime, you'd mentioned the fact that it was started by Viacom.

BLANK: Started by Vee-acom, now owned by Viacom.

NELSON: Now of course, Viacom has become a giant in the entertainment industry. How has that environment changed, being in a very small company, you and Tony, to this entertainment ...

BLANK: I think, in terms of our day-to-day environment, it hasn't changed that much. We've been fortunate to have a great deal of support from corporate, great deal of support from Sumner Redstone here at Viacom. They've been very, very happy with the changes here and our successes, and they've been very supportive. I think the reality, when you look at the media entertainment business today, it seems to be, whether you agree or not (at Viacom we agree) that scale is important. A lot of things we've done have changed the scalability of Viacom as a company - the Paramount transaction a couple of years ago and now the CBS transaction. Again, at the end of the day, I think that makes us more efficient programmers of networks. It makes us more efficient distributors of networks. It gives us more brand power. At the end of the day, it's all about audiences.

Viacom, CBS – it will be if this transaction is concluded (which we expect it is) almost by a factor of two, the largest seller of advertising in the world and have a stable of brands that are just unbelievable. When you look beyond a statistic like that, what I think is important when you say you're the largest, you're almost twice the size of the next biggest advertising medium in the world, what you're really saying is the following: "You're important to audiences." I think, ultimately, anybody who wakes up in the morning and thinks about programming, and thinks about movies and series, and whether they're at Paramount or Showtime or at MTV or at CBS, where does your impact come from? Your impact comes from your ability to reach and influence and move audiences. There's an expression we use at Showtime that is very important from a product standpoint to our division. That is, we're in the "hearts and minds business." We want to impact people at the "hearts and minds" level. So to the extent that your ability to increase your audiences, increase the scope of what you do, out of transactions like this will increase the hearts and minds that we can affect.

NELSON: How did that change in attitude because you talked about originally just people in the business saw themselves more as transmitting and distributing? Now that kind of in-road into the consumer psyche really is so much more important – that transition – where did that transition come from?

BLANK: I think that transition came from the evolution of the business and again, that economic vessel of cable. Cable was the economic vessel that allowed this business to become a creative business and attract some of the best creators that there are. When you look at the people who've worked to create all kinds of programming in cable, it's unbelievable. It's really unbelievable. And again, for people like me, that's the end product. That's the end product. How many people did we reach? How many people did we motivate? How many people did we touch? That's what's been so rewarding about the business for so many people.

NELSON: Were there sort of moments along the way where Matt Blank sort of sat back and said, "Holy cow! How did all this happen?"

BLANK: Today. Now. Yes. I don't think anybody would have really predicted that this would be what it has turned out to be. I always think of how lucky could you be, if you're going to work, ... I'm a guy who grew up in the late 60's, in college in the early 70s, didn't necessarily see myself in an expensive suit and shirt and tie going to the office. I still don't. But if you're going to do it, how great to be doing this, compared to the 99,000 other things you could have been doing. I think that everybody that's touched this business probably feels that way.